1. THE INTERNATIONAL ECONOMY Higher Economics Past Paper Questions Topic 1

2. REASONS FOR INTERNATIONAL SPECIALISATION AND EXCHANGE The International Economy: Outcome 1

3. 2012: QB5A – 8 MARKS  Describe the theories of Absolute and Comparative Advantage.

4. 2009: QB6A – 7 MARKS Cadbury has expanded production in Poland and has axed 700 manufacturing jobs in certain areas of the UK. These areas will experience a negative multiplier effect.  Explain why some UK firms might choose to expand production abroad rather than in the UK

5. 2009: QB4B – 8 MARKS Despite the UK’s reluctance to join the Eurozone, a 2006 report stated that “Britain remained the favourite European destination for foreign investment projects”.  Explain why foreign firms might wish to locate in the UK.

6. 2009: QB4B – 8 MARKS Despite the UK’s reluctance to join the Eurozone, a 2006 report stated that “Britain remained the favourite European destination for foreign investment projects”.  Explain the advantages and disadvantages for the UK economy of foreign direct investment.

7. 2007: QA1F – 2 MARKS  Give one example of a good or service that can be produced more cheaply in India or China than in the UK and explain why it can be produced more cheaply there.

8. 2007: QB1B – 8 MARKS  Explain the theories of absolute and comparative advantage.

9. FORMS, REASONS AND EFFECTS OF PROTECTION The International Economy: Outcome 1

10. 2013: QB5A – 5 MARKS  Describe the main economic benefits of free trade.

11. 2013: QB5A – 8 MARKS  Explain why some countries decide to impose restrictions on free trade.

12. 2012: QA1F(I) – 2 MARKS  Draw a diagram to show how guaranteed minimum prices to cotton farmers in the USA can lead to the over production of cotton.

13. 2012: QA1F(II) – 4 MARKS  Suggest 2 trade barriers that can be used to reduce imports and explain how they would work.

14. 2010: QB6A – 15 MARKS One argument used for imposing import controls on Chinese goods is that average production costs in the UK are higher than average production costs in China.  Describe some arguments for imposing import controls, other than cost differences.  Describe some arguments against imposing import controls.

15. 2007: QB1C – 12 MARKS  Argue the case for and against import controls.

16. SQP: QB6A – 8 MARKS Most economists would agree that free trade can benefit an economy.  Explain what is meant by free trade and describe some of the benefits it may bring to an economy.

17. SQP: QB6B(I) – 7 MARKS Most economists would agree that free trade can benefit an economy.  Suggest reasons why some countries may wish to restrict free trade.

18. SQP: QB6B(II) – 6 MARKS Most economists would agree that free trade can benefit an economy.  Other than tariffs, explain some measures countries could use to restrict trade.

19. BALANCE OF PAYMENTS The International Economy: Outcome 1

20. 2013: QB6B  Explain the reasons why the UK has a large “trade in goods deficit”. (5 marks)  Describe the components of the balance of payments accounts other than trade in goods. (6 marks)

21. 2012: QB3C(II) – 4 MARKS  Describe how a rise in the UK rate of inflation is likely to affect the Current Account of its Balance of Payments.

22. 2011: QA1C  Explain what is meant by a “deficit on Trade in Goods”. (2 marks)  Explain one reason for the UK’s Trade in Goods being in deficit. (2 marks)  Explain one reason for the UK’s Trade in Services being in surplus. (2 marks)

23. 2010: QA2H – 3 MARKS  Explain how a slowdown in the eurozone is likely to affect the UK Balance of Payments.

24. 2009: QA1E – 4 MARKS  Explain how an increase in the price of timber is likely to affect:  The UK balance of trade  The exchange rate of sterling

25. 2009: QA2F – 3 MARKS  Explain how an increase in the value of the yuan against the dollar is likely to affect the US balance of trade.

26. 2009: QB5A – 9 MARKS In the second quarter of 2007, Scottish manufactured exports grew at their fastest rate for 5 years.  Describe the main components of the Balance of Payments, other than trade in goods.

27. 2008: QB3A – 8 MARKS The slow down in the growth of UK National Income in 2005 was partly caused by the increased deficit on trade in goods and services.  Suggest and explain reasons why the UK usually has a deficit on trade in goods and services.

28. 2008: QB3A – 8 MARKS The slow down in the growth of UK National Income in 2005 was partly caused by the increased deficit on trade in goods and services.  Explain, using a circular flow of income diagram, how a deficit on trade in goods and services can slow down the growth of National Income.

29. 2008: QB3A – 9 MARKS The slow down in the growth of UK National Income in 2005 was partly caused by the increased deficit on trade in goods and services.  Suggest and explain measures the government could take to reduce deficits on trade in goods and services in the future.

30. 2009: QB5A – 9 MARKS In the second quarter of 2007, Scottish manufactured exports grew at their fastest rate for 5 years.  Describe the main components of the Balance of Payments, other than trade in goods.

31. 2007: QA1C(I) – 2 MARKS  Suggest and explain one reason for Britain’s large trade deficit.

32. 2007: QA1C(II) – 3 MARKS  Other than import controls, describe one measure Britain could take to reduce a trade deficit, and explain how it would work.

33. SQP: QA2E – 3 MARKS  Suggest and explain one reason for the large deficits in the UK Current Account.

34. EXCHANGE RATE SYSTEMS: EXCHANGE RATES AND POLICIES The International Economy: Outcome 1

35. 2013: QA1A(II) – 2 MARKS  Explain the term “floating exchange rate system”.

36. 2013: QA1B  Explain why a weak pound should encourage an increase in UK exports. (2 marks)  Apart from an increase in exports, describe the effects of a weak pound on the UK economy. (4 marks)

37. 2013: QA1C – 3 MARKS  Explain why low interest rates in the UK economy might lead to a depreciation in the value of sterling.

38. 2013: QA1F  Name one type of exchange rate system other than a floating system. (1 mark)  Describe one advantage and one disadvantage of the system you mentioned above. (4 marks)

39. 2012: QA1D – 2 MARKS  Explain how the price of China’s imports of raw materials would be affected if the exchange rate of China’s currency were to rise.

40. 2012: QB4B – 8 MARKS  Describe the factors which may cause the exchange rate of sterling to fall.

41. 2012: QB4C – 7 MARKS  Describe the likely effects on the UK economy of a fall in the exchange rate of sterling.

42. 2011: QA1E – 4 MARKS  Explain why a fall in the value of sterling:  Boosts exports  Puts upward pressure on the rate of inflation

43. 2011: QB6D – 10 MARKS  Discuss the advantages and disadvantages of a floating exchange rate.

44. 2010: QA2E – 4 MARKS  Explain one advantage and one disadvantage for the UK economy of a fall in the exchange rate of sterling.

45. 2009: QA1E – 4 MARKS  Explain how an increase in the price of timber is likely to affect:  The UK balance of trade  The exchange rate of sterling Also in Balance of Payments

46. 2008: QA1E – 2 MARKS  Explain the effect a rise in the price of oil might have on the foreign exchange value of sterling.

47. 2008: QA2B(II) – 3 MARKS  Explain how an increase in interest rates is likely to affect the exchange rate of sterling.

48. 2007: QB4A – 8 MARKS The UK has decided not to join the Eurozone, and will continue to allow Sterling to float. One reason for this is that joining the Eurozone would result in a large fall in the UK rate of interest.  Explain factors that determine the demand for Sterling on the foreign exchange markets.

49. 2007: QB4B – 10 MARKS The UK has decided not to join the Eurozone, and will continue to allow Sterling to float. One reason for this is that joining the Eurozone would result in a large fall in the UK rate of interest.  Discuss the advantages and disadvantages for a country of having a floating exchange rate.

50. SQP: QA2F – 3 MARKS  Explain how the change in interest rates from 2003 to 2004 could have caused the change in exchange rates in those years.

51. SQP: QA2G – 4 MARKS  In 2004, UK employment in manufacturing fell by over 100,000. Explain how this fall could have been partly caused by the change in the exchange rates of sterling from 2003 to 2004.

52. PATTERNS OF UK TRADE The International Economy: Outcome 1

53. 2013: QB2D – 6 MARKS  Explain 3 reasons why a multinational firm may choose to locate in Scotland.

54. 2012: QA2G(I) – 3 MARKS  Suggest 3 reasons why foreign firms might decide to locate in Scotland.

55. 2012: QA2G(II) – 2 MARKS  Explain one possible disadvantage of this foreign investment to the Scottish economy.

56. 2011: QB4B – 6 MARKS  Explain why foreign firms may wish to locate in Scotland.

57. 2011: QB4C – 8 MARKS  Describe some of the costs and benefits of Foreign Direct investment for the Scottish Economy.

58. 2009: QB5A – 6 MARKS In the second quarter of 2007, Scottish manufactured exports grew at their fastest rate for 5 years.  Suggest and explain reasons for the record growth of Scottish manufactured exports.

59. 2008: QB5A – 8 MARKS One effect of the growth of world competitiveness has been to make the demand for internationally traded goods more price elastic.  Suggest and explain reasons for the increased competitiveness in world markets.

60. 2007: QA1E(I) – 2 MARKS  Give 2 reasons why an American company might wish to set up a factory in Britain.

61. 2007: QA1E(II) – 4 MARKS  Suggest and explain 2 reasons for productivity levels in foreign-owned companies in the UK being higher than in British-owned companies in the UK.

62. THE INTERNATIONAL ECONOMY Higher Economics Past Paper Questions Topic 1

63. THE INTERNATIONAL ECONOMY Higher Economics Past Paper Questions Topic 2

64. THE EUROPEAN UNION The International Economy: Topic 2

65. 2012: QB2C – 5 MARKS  Describe the possible impact on the UK economy of economic recovery in other EU states.

66. 2012: QB5B – 12 MARKS  Explain the main economic advantages and disadvantages to the UK of membership of the European Union.

67. 2011: QB4D – 8 MARKS  Explain the main economic benefits that could arise for the Scottish economy of the UK joining the Eurozone.

68. 2009: QB6C – 10 MARKS Argue the case for and against the UK joining the Eurozone.

69. 2009: QB4A – 8 MARKS Despite the UK’s reluctance to join the Eurozone, a 2006 report stated that “Britain remained the favourite European destination for foreign investment projects”.  Suggest and explain reasons for the UK’s reluctance to join the Eurozone

70. 2008: QB6A – 12 MARKS One reason why Romania and Bulgaria joined the EU in 2007 was to increase their rate of economic growth.  Explain the advantages and disadvantages for the UK economy of EU enlargement.

71. 2007: QA2A(I) – 2 MARKS  Explain what is meant by “minimum guaranteed price”.

72. 2007: QA2A(II) – 2 MARKS  Draw a diagram to show how the EU minimum guaranteed price created sugar surpluses.

73. 2007: QA2G – 3 MARKS  Explain how the predicated changes in the EU’s sugar trade are likely to affect the future value of the Euro.

74. SQP: QB5C – 7 MARKS  Other than falling average total costs, explain some advantages and disadvantages for the UK of EU enlargement.

75. SQP: QB6C – 4 MARKS  Explain how the EU both promotes and restricts free trade.

76. INTERNATIONAL TRADING AND MONETARY ORGANISATIONS The International Economy: Outcome 2

77. 2013: QB6C – 6 MARKS  Describe the main roles of the:  World Trade Organisation  International Monetary Fund

78. 2009: QA2A(I) – 2 MARKS  Explain the term: World Trade Organisation

79. 2009: QA2B(I) – 2 MARKS  Explain how membership of the World Trade Organisation resulted in an increase in China’s economic growth.

80. 2007: QA2BC – 2 MARKS  Suggest why the move to reduce the minimum guaranteed price has been welcomed by the WTO.

81. SQP: QB2C – 7 MARKS  Describe some of the activities of the WTO and the World Bank.

82. RELATIONS: DEVELOPED AND DEVELOPING ECONOMIES The International Economy: Outcome 2

83. 2011: QB5A – 8 MARKS Less developed countries (LDCs) faced problems during the recession of 2009 partly because the demand for many of their exports is price inelastic but income elastic.  Describe some other economic problems facing LDCs.

84. 2010: QB1B – 10 MARKS  Describe ways in which developed countries can help increase the growth rates of developing economies.

85. 2010: QB1C – 9 MARKS  Discuss the advantages and disadvantages for the UK of increased growth rates in developing countries.

86. 2009: QA1H – 5 MARKS  Explain one reason for the increase in the number of building projects in some developing countries.  Explain how the increase in building projects in China and developing countries will affect the price of garden sheds in the UK.

87. 2009: QA2G – 4 MARKS  Suggest and explain 2 economic problems China’s industrial revolution has created for the rest of the world.

88. 2009: QB5C – 10 MARKS  Describe some measures developed countries could take to increase the growth rates of developing countries and explain how these measures would work.

89. 2008: QA1D  Suggest and explain one reason for the high rate of economic growth in China. (2 marks)  Explain how the UK might benefit from a high rate of economic growth in the US. (2 marks)

90. 2008: QB2C – 9 MARKS  Explain how developed countries can help to increase the economic growth rates of developing countries.

91. 2007: QA2F(II) – 2 MARKS  Explain how the dumping of huge sugar surpluses on the world sugar market has caused economic problems for sugar farmers in developing countries.

92. THE INTERNATIONAL ECONOMY Higher Economics Past Paper Questions Topic 2